Insights MENA

Economic Outlook

Egypt foreign debt increased by 17.2% amounting to 92.6 BN USD in June 2018, compared to June 2017. The CBE noted that the increase in debt resulted from higher loans and financing, as well as a rise in foreign currencies exchange rates against the US dollar which accounted for a 0.4 BN USD increase. Foreign Debt to GDP ratio reached 37% in 2017/2018, which remains within the safe limits, as per the international standards.

Egypt Minister of Petroleum Tarek El Molla announced that Egypt is working on a new production sharing model with foreign energy companies to encourage oil and gas exploration in deep waters. Under the new model, companies will be offered a share of production in exchange for bearing the costs of exploration and production.

Russian sovereign wealth fund RDIF announced that its Saudi counterpart would become a new partner in the joint Russia-China Investment Fund. Under the deal, Riyadh Public Investment Fund (PIF) will contribute 500 MM USD to what becomes the Russian-Chinese-Saudi investment fund, raising its total capital under management to 2.5 BN USD.

Saudi Arabia non-oil revenues in Q3-2018 jumped 48% reaching 211 BN SAR (56.25 BN USD) compared to Q3-2017. The kingdom, which is working on a number of economic reforms to diversify its oil-reliant economy, had non-oil revenues of 89.4 BN SAR (23.8 BN USD) in Q2-2018, up 42% from Q2-2017.

Consumer confidence in the UAE dropped significantly in Q3-2018, as more UAE residents are worrying about keeping up with a rising cost of living. The Consumer Confidence Tracker in Q3-2018 scored 52.6% compared to 41.2% in Q2-2018, almost a 10%-point increase in the number of people who said that they will not be able to afford any rise in the cost of living in the country.

Dubai Statistics Center (DSC) revealed that Dubai resident population grew by 232,400 to reach 3,136,400 in Q3-2018, a growth of 7.7% from Q3-2017. The rise in population reflects Dubai growth as a dynamic economic and tourism hub. The population of non-resident workers and temporary residents in Dubai is currently 1,155,000, while the total active daytime population of the emirate is 4,291,400. Almost 37% of Dubai active daytime population comes from outside the emirate.

The UAE online recruitment landscape has registered the highest growth in the region at 27% in Q3-2018 from Q2-2018. The surge in online recruitment across the Emirates over the past three months agrees with the recently announced increase of 1.97 BN AED (536 MM USD) for the current 2017/2018 allocated from the country's general reserves.

In Kuwait, the property trades in August 2018 were valued at 136 MM KWD (447 MM USD) from 310 transactions, against 548 MM KWD (1.8 BN USD) from 744 deals in July 2018. The real-estate in August 2018 ­­witnessed noticeable decline in all of its sectors. The level of private housing trade in August 2018 was the lowest in two years, decrease by 8%, in contrast to August 2017.

Political Events

Sudanese President Omar al-Bashir announced that he lifted a partial ban on the imports of Egyptian products to Sudan, to remove all obstacles to the movement of trade and people between the two countries. The value of Egyptian exports to Sudan reached 550 MM USD in 2017, while Sudanese exports to Egypt reached 103 MM USD in 2017.

Egypt parliament voted to extend a state of emergency in the country for three months, prolonging the authorities' ability to use special powers into 2019. Egypt first imposed a state of emergency in April 2017 after two church bombings killed at least 45 people and has extended it at three-month intervals since.

New Pakistani Prime Minister Imran Khan will visit China next week and meet President Xi Jinping, in order to to obtain fresh loans to the economy. Pakistan has received a 6 BN USD rescue package from Saudi Arabia, but officials say it is not enough and the country still plans to seek a bailout from the International Monetary Fund (IMF) to prevent a balance of payments crisis.

The German Embassy announced the opening of a new visa application center in Kuwait in a move aimed at bringing greater efficiency to visa application processing services and enhanced customer experience to the residents of Kuwait.

Stock Market

.ADI the banking sector decreased led by First Abu Dhabi Bank (FAB). Moreover, the real estate sector decreased led by Aldar Properties, Eshraq Properties and RAK Properties. However, the telecommunication sector increased led by Etisalat.

.DFMGI real estate sector decreased led by Damac Properties and Drake & Scull as well as the banking sector decreased led by Dubai Islamic Bank. In addition, the investment and financial services sector decreased led by Dubai Investment and Dubai Financial Market.

Note: Weekly values are calculated on Thursday of each week.

Companies Transactions

The Arab Petroleum Investments Corporation (APICORP), a multilateral development bank, has announced signing a financial structuring mandate with Suez Company for Methanol Derivatives to finance the development of a formaldehyde and derivatives project in Damietta, Egypt. The total project cost is estimated at 60 MM USD. The amount of planned debt financing is expected to be worth between 35- and 40-MM USD. The plant production is aimed to supply the local market, although certain quantities will be exported in the early years.

Mastercard, a leading technology company in the global payments industry, reiterated its support of the Egyptian government vision to accelerate the advancements of its payment ecosystems and drive inclusive growth through innovations in the payments industry. Effective public-private partnerships present a tremendous opportunity to drive sustainable and diversified economic development in Egypt.

Majid Al Futtaim, the leading shopping mall, communities, retail, and leisure pioneer across the Middle East, Africa and Asia announced an investment in Wadi which operates Wadi Grocery, the fastest growing online grocery delivery platform in Saudi Arabia. The investment in Wadi is part of a 30 MM USD funding that will help set up the delivery mechanism for all Carrefour stores within KSA. As part of the agreement, Carrefour will become Wadi Grocery's long-term strategicpartner for supplying food and non-food groceries.

Virgin Mobile, the second brand under the Emirates Integrated Telecommunications Company (EITC), has teamed up with Netflix to provide customers an unmissable offer. New and existing Virgin Mobile customers, on a plan worth 150 AED or above, will enjoy a 3 months subscription with Netflix at no extra fee.

The Registration Authority of Abu Dhabi Global Market (ADGM), has signed an MoU with the Industrial Development Bureau (IDB) in order to develop a platform to support strategic industrial projects with the aim of expanding the region's industrial sector and promoting economic diversification. UAE industrial sector is becoming a key driver of the nation's economic expansion.

Eleven Emirati banks posted net profits of 22.7 BN AED in September 2018, a growth of 11.3%, compared to 20.4 BN AED in September 2017. The growth verifies the robust wealth of the UAE banking sector and its ability to weather challenges despite the slowdown recorded in some parts of the region.

Etisalat Group has registered an increase in both profit and revenue according to consolidated financial statement for the nine months ending September 30, 2018. Etisalat revenues reached 39.4 BN AED indicating a surge of 3% compared to same period in 2017 and net profit amounted to 6.6 BN AED posting an increase of 2% compared to same period in 2017.

Middle East petrochemicals, metals and fertilizer group Industries Qatar (IQ) witnessed a 80% jump in earnings in Q3-2018 reaching 1.32 BN QAR (363 MM USD) compared to 747.8 MM QAR (205.3 MM USD) in Q3-2017. The company reported a net profit of 3.8 BN QAR (1.04 BN USD) during the nine months of 2018 compared to 2.4 BN QAR (659.14 MM USD) during the same period in 2017.

Deposits at banks operating in Qatar increased by 2.5% y-o-y in September 2018, reaching 817.85 BN QAR (226.78 BN USD), compared to 797.83 BN QAR (221.23 BN USD) in September 2017. On a monthly basis, deposits at the Qatari lenders increased by 1.3% in September 2018, compared to 807.34 BN QAR (221.7 BN USD) in August 2018.

Sports and Culture

World number three Roger Federer beat Romanian qualifier Marius Copil to win the Swiss Indoors and claim his 99th career title in front of his home crowd in Basel. Federer began the year by winning the Australian Open and his ninth Basel title was his fourth of the season but the first since his victory in Stuttgart in June 2018.

Chelsea defender Marcos Alonso has signed a new five-year contract that will keep him at Stamford Bridge until 2023. Alonso, who joined Chelsea from Fiorentina in August 2016, established himself as a left wing-back under former manager Antonio Conte, and helped the club win the league title in his first season. He has completed a successful transition to fill the left-back role since Maurizio Sarri took charge at the start of the current campaign.

Anthony Martial and Paul Pogba were Manchester United goal heroes as the Reds held off a late Everton rally to win 2-1 at Old Trafford. Pogba had given the Reds a half-time lead when he followed up his penalty, which was saved by Jordan Pickford, to score the rebound. Moreover, Martial extended United's lead in the second half when he scored his fourth Premier Leaguegoal in his last three outings. But Everton forced their way back into the game when Gylfi Sigurdsson scored.

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